Labor Department rankles advisers with quick video on fiduciary

Financial advisers have been thrust into the national spotlight after President Barack Obama directed the Department of Labor to move forward a fiduciary standard rule. To accompany the president's announcement at AARP in Washington on Monday that conflicted financial advice was costing Americans' their retirement savings, the Department of Labor released two videos to send the message that clients may need to reevaluate their financial advisers. The response from advisers was mixed. Some said the comparison of financial advisers to doctors and lawyers was correct, and that a fiduciary standard is preferred. Others, however, complained that advisers were all being grouped together in a negative light. "I have long believed the financial profession has to professionalize in the same way," Blair H. duQuesnay, a financial adviser in New Orleans, said. "The fact of the matter is there is unfortunately a lot of systems set up not in the best interest of clients." The video states that Americans go to experts for advice for important decisions — be it doctors for health or lawyers for legal rights — and that financial advisers should be in the same category. It goes on to say that's not always how it works out. The argument raised on Twitter between Michael Kitces, a partner and director of research at Pinnacle Advisory Group, and others was that the video is so simplistic in nature that it groups together all financial advisers, when the White House was referring to brokers who do not follow fiduciary standards.

.@Megan_Leonhardt What saddens me is that @WhiteHouse & @USDOL throw ALL advisors under bus to make point about bad ones. @BarbaraRoper1

— MichaelKitces (@MichaelKitces) February 23, 2015

David Mendels, director of planning at Creative Financial Concepts in New York, said the video might spark conversations. "It raises the question, it doesn't answer it," Mr. Mendels said. "My only question is what they're intention is with the video." A separate video by the Labor Department, also posted Monday, highlighted the conflicts of interests that arise when clients meet with advisers who do not disclose their fees. "I think it's spot on from the standpoint of appropriate fee disclosure," Kevin Starkey, president of FTN Capital Management, said. "But I think the video is intellectually dishonest and only points to the expenses." Mr. Starkey, who manages a full disclosure firm, pairs the video with the White House's report, which he said is still vague in its conclusion but is more detailed than the video.